WE must now examine the influence of the monetary system
upon accumulation. Our model economy has evolved (we
will suppose) beyond the stage of paying the weekly wage bill
in nails.1 Certain highly respected banks have long been
established which cater for the monetary needs of the system.2

The banks have to observe certain rules of the game. In
reality these have been evolved in a complicated legal system
full of anomalies and fossils from the past, and are regulated
by public institutions such as the Bank of England or the
Federal Reserve System. To make our analysis both as general
and as simple as possible we will assume that our banks behave
in the proper manner without specifying any particular form
of discipline.

In reality the forms of borrowing, and therefore the types
of titles to wealth represented by the obligations of debtors,
are infinitely various, but we can exhibit all the main features
of the capitalist financial system while making use of a few
sharply distinct types. We shall assume that titles to wealth
consist only of notes, bonds and bank deposits, and that there
are only three kinds of borrowing -- borrowing by entrepreneurs from the banks against bills; borrowing by entrepreneurs from each other (we have not yet introduced rentiers
into the model) against bonds, which may be purchased at
second hand by the banks, and borrowing by the banks from
entrepreneurs against deposits.

We shall introduce these forms of borrowing successively,
beginning with notes issued against bills. In order to keep a

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